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Intuit Reports Strong Second-Quarter Results

The following excerpt is from the company's SEC filing.

TurboTax Online Unit Growth of 12 Percent and QuickBooks Online

Subscriber Growth of 49 Percent Drive Momentum

Intuit Inc

. (Nasdaq: INTU) announced financial results for the second quarter of fiscal 2016. The company’s fiscal second quarter ended Jan. 31.

“We’re out of the gates strong in the first half of fiscal 2016. We grew revenue 23 percent in the second quarter, and exceeded our guidance across the board. We also saw record QuickBooks Online subscriber growth in this quarter, with over 80 percent of customers new to the Intuit franchis e,” said Brad Smith, Intuit’s chairman and chief executive officer.

“Our tax strategy is focused on expanding the do-it-yourself software category while driving customer growth and share gains, particularly in the simple returns segment. As we shared today, TurboTax units grew 9 percent through February 20, demonstrating we’re off to a strong start. Early adoption has been driven by product innovation, as we continue on our journey to reimagine tax preparation.”

Financial Highlights

In the second quarter Intuit:

Reported 23 percent revenue growth, which includes the impact of ratable revenue recognition for certain desktop software offerings and an extra weekend day in January versus last year for tax filers.

Intuit Reports Second Quarter Fiscal 2016 Earnings

Reported TurboTax Online units grew 12 percent year to date through Feb. 20, versus the comparable prior-year period. Total TurboTax units grew 9 percent.

Increased total QuickBooks Online subscribers by 49 percent.

Repurchased 4.8 million of its common shares for $455 million.

Unless otherwise noted, all growth rates refer to the current period versus the comparable prior-year period, and the business metrics and associated growth rates refer to worldwide business metrics.

Business Segment Results

The segment results below reflect the treatment of assets held for sale, including QuickBase, Quicken and Demandforce, as discontinued operations.

Small Business

Total Small Business segment revenue increased 7 percent.

Small business online ecosystem revenue grew approximately 23 percent for the quarter, as online customer acquisition continues to drive growth.

Added nearly 100,000 QuickBooks Online subscribers in the quarter, bringing the total to 1,257,000 customers worldwide as of the end of January.

Grew QuickBooks Self-Employed subscribers to 50,000, up from 35,000 in the last quarter.

Grew QuickBooks Online users outside the U.S. by roughly 80 percent, to 230,000 paying subscribers.

Increased online payments customers by 5 percent, and online payments charge volume by 17 percent.

Grew online payroll customers by 17 percent.

Consumer and Professional Tax

Consumer Tax revenue was up 29 percent, driven by an extra weekend day in January versus last year for tax filers. Intuit reiterated fiscal 2016 Consumer Tax revenue growth guidance of 5 percent to 7 percent.

ProTax grew revenue to $84 million, driven by changes to desktop offerings that affected the timing of revenue recognition.

Intuit will provide a final tax unit update in April after the tax season ends.

Snapshot of Second-quarter Results

Non-GAAP

FY 16

FY 15

Change

Revenue

Operating Income (Loss)

($0.23)

($0.06)

Dollars are in millions, except earnings per share (EPS). See “About Non-GAAP Financial Measures” below for more information regarding financial measures not prepared in accordance with Generally Accepted Accounting Principles (GAAP). Q2 FY16 results reflect the impact of changes to certain desktop software offerings; revenue for those offerings is recognized as services are delivered, rather than up front. Q2 FY16 results also reflect the treatment of assets held for sale as discontinued operations.

Capital Allocation Summary

In the second quarter the company:

Repurchased 4.8 million shares for $455 million, with $900 million remaining on its authorization as of January 31.

Received board approval for a $0.30 per share dividend for the fiscal third quarter, payable on April 18. This represents a 20 percent increase versus last year.

Forward-looking Guidance

“I’m pleased with our performance for the first half of our fiscal year. Based on these results, we’re on pace to deliver against our full-year guidance,” Smith said. “That’s why we’ll continue to play offense, with investing for customer growth remaining our first priority. We have lots of opportunity in front of us, and we remain deeply committed to accelerating customer and revenue growth.”

Intuit announced guidance for the third quarter of fiscal year 2016, which ends April 30. The company expects:

Revenue of $2.21 billion to $2.26 billion, growth of 4 to 6 percent. Third-quarter revenue growth guidance reflects the shift of Consumer Tax revenue into the second quarter due to an extra weekend day in January versus last year for tax filers.

GAAP operating income of $1.20 billion to $1.22 billion, growth of 13 to 14 percent.

Non-GAAP operating income of $1.28 billion to $1.30 billion, growth of 5 to 6 percent.

GAAP earnings per share of $2.95 to $3.00, versus $1.78 in the year-ago quarter.

Non-GAAP earnings per share of $3.15 to $3.20, growth of 11 to 12 percent.

QuickBooks Online subscribers of approximately 1.38 million.

Intuit reiterated its revenue, operating income and earnings per share guidance for fiscal 2016:

Revenue of $4.525 billion to $4.600 billion, growth of 8 to 10 percent.

GAAP operating income of $1.115 billion to $1.145 billion, growth of 51 to 55 percent.

Non-GAAP operating income of $1.450 billion to $1.480 billion, growth of 27 to 30 percent.

GAAP diluted EPS of $2.55 to $2.60, versus $1.28 in fiscal 2015, which included goodwill and intangible asset impairment charges.

Non-GAAP diluted EPS of $3.45 to $3.50, growth of 33 to 35 percent.

Intuit also narrowed its full-year guidance range for QuickBooks Online subscribers, to 1.475 million to 1.500 million.

Management Rotation Planned for May 1, 2016

Effective May 1, Dan Wernikoff, executive vice president and general manager of Intuit’s Small Business Group, will become general manager of the Consumer Tax Group. At the same time, Sasan Goodarzi, executive vice president and general manager of the Consumer Tax Group, will take over as head of the Small Business Group.

As the company accelerates its journey to becoming a single Intuit ecosystem, strengthening and developing senior talent is critical. This rotation enables Intuit’s Small Business and Consumer Tax leaders to develop deep empathy for each of the company’s core customers, as well as an understanding and appreciation of the collective products and technologies in the Intuit ecosystem.

“We’re able to make leadership moves like this from a position of strength,” said Smith. “We’ve got great momentum and a strong outlook in both Small Business and Consumer Tax, and I’m excited to watch that momentum continue.”

Conference Call Details

Intuit executives will discuss the financial results on a conference call at 1:30 p.m. Pacific time today, Feb. 25. To hear the call, dial 866-348-8108 in the United States or 908-982-4619 from international locations. No reservation or access code is needed. The conference call can also be heard live at

http://investors.intuit.com/events/default.aspx

Prepared remarks for the call will be available on Intuit’s Investor Relations website after the call ends.

Replay Information

A replay of the conference call will be available for one week by calling 888-266-2081, or 703-925-2533 from international locations. The access code for this call is 1668417.

The audio webcast will remain available on Intuit’s website for one week after the conference call.

About Intuit

. creates business and financial management solutions that simplify the business of life for small businesses, consumers and accounting professionals.

Its flagship products and services include

® and

®, which make it easier to manage

tax preparation and filing

Mint.com

provides a fresh, easy and intelligent way for people to manage their money, while

ProSeries

® and

Lacerte

® are Intuit's leading tax preparation offerings for professional accountants.

Founded in 1983, Intuit had revenue of $4.2 billion in its fiscal year 2015. The company has approximately 7,700 employees with major offices in the

Canada

, the

United Kingdom

and other locations. More information can be found at

www.intuit.com

This press release and the accompanying tables include non-GAAP financial measures. For a description of these non-GAAP financial measures, including the reasons management uses each measure, and reconciliations of these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with Generally Accepted Accounting Principles, please see the section of the accompanying tables titled "About Non-GAAP Financial Measures" as well as the related Table B1, Table B2, and Table E. A copy of the press release issued by Intuit today can be found on the investor relations page of Intuit's Web site.

Cautions About Forward-looking Statements

This press release contains forward-looking statements, including forecasts of expected growth and future financial...


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